THE GOVERNMENT IS looking at ways to force banks to pass on EU interest rate cuts to mortgage holders, after it emerged three of Ireland’s largest lenders would not be passing on the reductions.
Tánaiste Eamon Gilmore said the Government is “considering legislation” in the area, and could “take action” if the situation was not resolved.
“It is the intention of the Government that the interest rate reduction should be passed on,” he told the Dáil this morning.
Government ministers met with representatives of AIB, Bank of Ireland and Ulster Bank yesterday. AIB has announced that it will not be passing on the rate cut, and it is understood that Bank of Ireland and Ulster Bank are taking the same position.
Gilmore said the meeting was not a “polite conversation”. “We’ve told them [the banks] what our objective is,” he said. “If the banks do not reconsider the position they expressed yesterday, then on the basis of the assessment from the Financial Regulator we will take action as appropriate.”
The Financial Regulator is due to report to the Government on whether new powers are necessary to compel the banks to pass on the rate cuts.
Neither Bank of Ireland nor Ulster Bank have publicly confirmed that they will not be reducing their rates on variable mortgages. A spokesperson for Bank of Ireland told TheJournal.ie: “Our rates are constantly under review.”
In a statement, an Ulster Bank spokesperson said its mortgage rates are also under constant review, and relate to the cost of funding. “If the cost of funds goes down we would pass on those rates,” she said.
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